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tv   Squawk on the Street  CNBC  October 14, 2009 9:00am-11:00am EDT

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and, therefore, we're going to get revenue improvement. we're getting earnings improvement. but the key is to get revenue improvement. and there are going to be encouraging signs before year end. >> 10% is not bad, but if 90% of the people feel better than they did a year ago, then we could see it. >> look, we don't need to come down a lot. we just need to peak and start ticking down. and that's what i think we're going to see. >> all right. byron, thank you very much for joining us. appreciate it. >> great to be here. >> that does it for us. be sure to join us tomorrow. ""squawk on the street"" is next. live from the financial capital of the world, this is "squawk on the street." good morning, everybody. i'm mark hanes. >> and i'm erin burnett. this, mark, is likely to be -- we have a little pad. the day we go over the 10,000 mark. we're approaching the opening bell. dow 10,000 is what it says. mark, it's only fair to say we
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were there ten years ago. but you got to start somewhere. futures are up massively this morning. it's going to be a very big open. j.p. morgan, ball out of the park. at least on the bottom line. and then for the second biggest bank in the country, $3.6 billion, 82 cents a share. and they're going to surge the open mark. >> not enough for you, is it? >> i see some things don't smell so right in there. >> all right. >> i sniff some things. >> abbott labs boasting big numbers this morning. profit rows 37%. $4.8 billion that, works out to 95 cents a share. here's abbott labs. intel indicated higher as well. the tech stock released a better than expected forecast. they beat estimates earning $1.9 billion or 33 cents a share. and now let's hit the markets.
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we start with scott -- here come the judge wapner at the big board. >> mark, good morning to you. yes, we may cross 10,000 intraday to da intraday to day. so it's been about a year or so here. obviously j.p. morgan knocked the cover off the ball with earnings. it's up in the free market. it's really set the stage for financials to be strong right out of the gate. almost across the board. citi is looking higher. bank of america, wells fargo, barclay's and goldman sachs all with 2% gains right off the open this morning. on at labs, two cents ahead of estimates. they raised their outlook. that stock is higher. csx with three sents ahead cent expectations. the ceo saying the worst is over. he sees freight trends improving. host hotels, they own more than 100 hotels. most are operated by marriott. the eps beat on cost cutting.
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the guidance is light. amr is up and barclay's capital increases to equal weight. let's go to bertha coombs. >> intel hit it out of the park. not only beat on the bottom line, the most important thing is everyone is watching for this quarter, they beat on the top line and they raised their guidance on the top line. the margins were stronger. they said basically those high end pcs, people are buying the consumers really what was the standout in the quarter and as they look out here to the fourth quarter, intel up is 4%. the halo effect is big. we have a number of other companies that are reported yesterday and this morning. altera last night, linear and they also were better as well. that is boosting the outlook. take a look at how the computer makers are doing. dell up is by 2%. apple up by 1.5%. they had very good things to say about demand there for pc. and microsoft which, of course, will be launching windows 7 next week, microsoft also higher as it completes its sale.
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majority stake of publicist. let's move down to the nymex. >> i can't extend the metaphor. nothing getting hit out of the park down here. i'll tell you doesn't mean we don't have an interesting game. take a look at gold. because it's down. we did hit another intraday high of 1070. but it got slapped down. the dollar is weaker. maybe appetite and spiking with this equity rally we have, money may be getting rotated. either way, it met resistance. and right now it's pulling back. very interesting storey. see if it holds up. the rest of the metals, copper holding up better than everything else. i also want to talk about oil. we got over $75. a key, key level. that also pushed back. but we're still to the upside. of course, opec adding another 200,000 barrels per day to the 2010 demand. i also want to keep in touch with nat gas. they said they may have to rotate out of futures for
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compliance sake. that's to the down side. let's go to rick santelli, my friend in chicago. >> thanks. we know that retail sales head lined and didn't look very good. but when you strip out autos or autos and gas or any other combination, it definitely improves marketedly. import prices are contained. some of the earnings are pretty good. interest rates are elevated. you know, once again, it seems as though that we went to 3% last week early and we got down to 3.10%, those days may be behind us. treasury buy backs are out of money. of course, we need to now think about some of the j.p. morgan news today. and david faber is coming up with the fabe report. there are loans second equity liens. the journal pointed out today and credit cards. so david faber, the faber report, what's going on with j.p. morgan? >> thanks, rick. a lot, of course. you heard already. the stock is going to be up this
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morning on much better than expected numbers. but as to your overall point about the quality of credit and concern about the delinquents coming, we're going to get to that in a moment. let's start with the outcome. you see the stock is going to be up rather nicely. call it almost a couple bucks there. up for j.p. morgan which, of course, rebounded sharply as some of the other financial institutions and some of the stocks have since march. now, j.p. morgan is more transparent than many of its peers in the financial services. it can be. take a look at the numbers coming in well above the estimates. but i would still stress that for people out there who actually own this thing or anything else, go to the 10-q. go to the filings. take a look at what's really going on. we certainly all learned that lesson. you cannot rely just on press releases. that being said again, j.p. morgan gives you a lot of information in the press release and in their accompanying dex as we call them than do many other financials. and much of it looks very, very good. you see it there, of course. the net income number.
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the loan-loss coverage ratio is 5.3%. they increase reserves for credit losses to $31.5 billion. that is 5.3%. tier one common ratio, 8.2%. and tier one common capitol is $101 billion or 8.2% as you see the capital ratio, 10.2%. as for roe, we used to measure banks return on equities. they're doing a lot befrmenttte. 1% a year ago, 9% return on equity this quarterment investment banking leading the charge. investment banking fees at $1.6 billion. fixed income, $5 billion in revenues including gains. they're writing up leverage loans and the value of mortgage-related positions. and so j.p. morgans having a very, very good quarter. take a look at what rick was referring to.
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namely, the continued trend on delinquency. let's start with equity. and this is from the dec from is j.p. morgan. the trend is up. prime mortgage delinquency trends are the same. the trend continues to be maybe pressing. maybe it's pressing. you can see at the bottom there 30 to 89 delinquencies. those are the dotted lines. again, for j.p. morgan this is not necessarily that grave a concern because they're adding to reserves. they're generating enormous amounts of earnings and cash that they're able to put into those reserves. for other financial institutions, perhaps a bit more worrysome. finally, the card services outlook is interesting. i mention it only because it's one of the few things that's changed on the outlook quarter to quarter. chase losses of 10.5% by the first half of this year. loss rate of 9%. and 11% in 2010.
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that was a bit higher than what we saw from last quarter's outlook. and they did say some initial signs of stability, consumer delinquency trend but not certain if this trend will continue. why don't we get a little more insight on j.p. morgan's numbers. on the phone we have jeff hart, managing director of equity research. jeff, a good quarter. anything at all that gives you pause here? >> yeah. good morning. a very good quarter. the big kind of driver here of the beat was fixed income trading. and for them, that shows up at both the investment bank and others. that should be good news for the peer who's are reporting the last couple weeks as well. the -- i think the other piece of good news for the peers, while we're talking about the peers, is they had some reversal of losses that had not gone through income statements. oci and the balance sheet which real way helped to boost their tier one common ratio. if we see that across kind of the banking universe, i think banks out there that are viewed as having really weak capital
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ratios like a bank of new york, for instance, could be a big beneficiary on that trend. the thing to maybe be concerned about, though, is credit. the last quarter we were hearing from j.p. morgan and manufacture the peer that's early stage delinquencies were trending downward. the loss rates were going to get better as we go forward. in some cases, like credit cards and equity, those rates have started increasing. >> we just showed the charts. reversals, where is that taking place? i see here leverage lending. some mortgages. is that where we should be looking on the balance sheet of the other institutions as well? >> yeah. i mean we're in a fairly unique situation here. for the last six or eight weeks, i mean pretty much every asset class has gone up will and you're starting to see some volumes along with it as well. so, you know, before where the index like the cmbx would be up, it was hard to mark up a lot of the commercial mortgage backed
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securities because they weren't actually trading. now they're starting to trade. we should see pretty strong gains. kind of across the, you know, leverage loans, commercial backed securities, mortgage backed securities. kind of across those type of securities. >> bank of america, you recently reduced your third quarter estimates from a loss of three cents to 28 cents. does this give you any pause or think that maybe it will be better than that? >> it would imply that numbers will be better. the other thing that kind of stands out here is that hedges j.p. morgan had on the credit portfolio didn't work very well. so i think you're more willing to take trading risk companies that have the potential to outperform this quarter. and i think, you know, within merrill lynch, they're not risk neutral. that should help them. but j.p. -- or bank of america is -- yeah, these are good results for them as well. that is the bottom line. >> all right. we'll see what the results, of course, look like. jeff harte thank you for joining us. mark, back to you. >> thank you very much david faber. more earnings right after the
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break. we're watching the futures very closely as well. >> all right. we're -- it looks as if we're going to hit that dow 10,000. sure it may just be psychological. that is the big story of the day. if we do not hit it, mark that, will be a shocker. bell rings at 9:30. y, cars will be engineered using nanotechnology to convert plants into components. the first-ever hs hybrid. only from lexus. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access
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we were just talking about j.p. morgan. that is the story of the morning. the stock closed at 47.20. is this an indicator of what we're going to see the rest the season? is this something we can expect? it is something we have chance to ask this morning. one analyst said that j.p. morgan really leads the pack. >> especially for the credit-based financial that's are dealing with fairly significant credit losses in their health and maturity loan portfolios, j.p. morgan stands apart in its capacity to absorb that credit loss. and still report fairly strong earnings which you saw today. they stand apart in terms of higher capital ratios and in terms of higher reserve
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coverage. so definitely leader of the pack in terms of the big credit-based financials. >> although we have been seeing a lot of the other financials trading higher from the numbers of jp morgan and bank of america. $18.35. that is quite a bit above where it closed yesterday. and goldman sachs which is reporting tomorrow also has seen some gains. $191.76. joe, we talked to somebody today who said, man, they have to put up monster numbers tomorrow to impress. >> yeah. >> why wouldn't they raise the numbers? >> back where meredith whitney made the comment. down $2 or $3 yesterday. i guarantee goldman sachs was sitting on its hands while j.p. morgan, i mean they have guys that know how to trade fixed income. it was capital markets. >> so trading revenue that was boosting all of these things going into it. also -- >> especially the guys that know where they're going, like goldman sachs. >> the big thing you have to look at is when you can actually start to see them stopping, adding extra reserves. they added about $2 billion to
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the consumer credit reserves. the cfo was making comments to reporters earlier where he says we think we're coming close to the end of the reserve building. byron said that could be really good news. >> yeah, what do we got, up about $1.40. intel, even though it pulled back a little bit on the gain, it is lower price stock. it is still up in percentage terms of the dow component. still up more than j.p. morgan and actually this has a lot more to do with the initial firm tone of the stock market. i think we have about 95 to 100 points of upward momentum from intel and then you add to that with j.p. morgan. yurg seeing the people distinguish themselves, the bears say it's inventory. the bulls say the consumer really did show up. this could portend good things for technology. >> and abbott labs is showing the same thing. right now $50.61 after closing
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at at $49.65. now they're saying that they expect $3.70 to $3.72. before this, $3.65 to $3.70. >> i guess the question, is like clint said, do you feel lucky? do you feel like 10,000, erin? do you feel lucky, punk? maybe it happens today. who knows? >> i mean come on. it's got, to right? >> i mean even csx is higher. do you feel lucky? >> thank you guys. mark hanes is feeling very lucky. uaw reaching an agreement on a key labor issue. phil lebeau spoke with the president earlier this morning. phil, optimism there? >> yeah, erin. you can see it in the stock. the stock indicating high they are morning. you take a look at this agreement, a couple things to keep in mind. for the rank and file worker, 41,000 of them at ford, this agreement is essentially similar to what the uaw reached with gm
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and chrysler. there have been a lot of reports that there is a no strike provision from when the contract comes up. but this morning they indicated that unlike the g.m. and chrysler contract, the ford deal does not ban future strikes. >> first of all, we don't want a strike unless we just absolutely have to. secondly, there are other provisions that remain in the '07 agreement as an example, health and safety where we still maintain the right to strike. >> take a look at shares of ford. as i mentioned, indicating higher this morning. we could see this thing tickling $8 a share. mr. get will finger believes ford and gm and chrysler are poised after going through a rough year and a half. they are all poised to move higher due to better products. >> the good thing is here is we've got great products out there. if we can just get to consumer to come into the showroom and take a look at it. i think you'll see the market share improve as it has at ford. >> and he's talking about gm and chrysler. he believes the turn around will gain traction in the month to
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come. you can watch the complete interview with ron gettlefinger at do back to you. thank you very much, phil lebeau. straight ahead, we have the word on the street. and the countdown to the opening bell. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab tdd#: 1-800-345-2550 or visit today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 do i love that feeling.
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welcome back, everybody. and we are talking about breaking news because we're looking at what is going to be a very sharply higher open.
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thanks most to the jp morgan. good news across the board. maybe that 10,000 level reached very quickly at the open. let's get down to mark. we count down to the bell. mark? >> thank you very much. i'm down here with terry dolan from benjamin gerald. what do you think? 10,000 the first ten minutes? >> it sure looks like it. the only thing i don't like about what i see now is everybody expecting it. the market has a way of disappointing. and there's a couple other things i don't like about the fundamentals. >> it's wet blanket dolan, go ahead. >> fundamentally, there are only two-ways to grow an economy, consumer spending and real growth in planned equipment expansion. i see nothing from the companies cha are indicating they're investing at all in plant equipment. i think consumers are shopping but only when there comes to bargains like the clunker deal you're seeing and other things like that. that type of thing can be offset by expectations turning favorable as we go into the christmas season. it remains to be seen. i don't see a strong recover riff any sort. >> all right.
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so you're still in the this market is ahead of itself camp? >> i've been on the sidelines for a while. yes, i think it's a little bit ahead of itself. it is a self-fulfilling proph y prophecy. we'll see whether or not they disappoint. >> sidelines have not been very profitable here. >> no, but if you were in for the first move, you were satisfied not exposing yourself to the next 500 points or so. >> all right. you are staying on the sidelines for now? >> for the moment, for sure. >> terry dolan, thank you. we'll be right back. #
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l-informed people are considering a chevy malibu. are you a cop? no. you didn't hear it from me, but this malibu is a best buy. yeah, i heard that from consumers digest. it offers better highway mileage than a comparable camry or accord.
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estimated 33 highway. i saw that on the epa site. so how come the malibu costs so little. it's a chevy. you have cop hair. introducing the 60-day satisfaction guarantee. buy a new chevy if you don't love it, we'll take it back. [bell ringing] the way the stock market's been acting lately you may wonder if you've been doing the right thing. is the advice you've been getting helping or hurting? are the fees you're paying really worth it? td ameritrade's fees are fair and straight-forward.
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their research is independent and unbiased. their investment consultants are knowledgeable and there when you need them. so why not talk to one? announcer: call today to schedule a free investment check-up, or visit a td ameritrade branch. welcome back, everyone. this is a look at fair value. if you're looking at where futures ended their session, mark, which is quarter past the hour, if you look at where the s&p 500 and the nasdaq futures are, if you had a similar percentage move for the dow, 1.38%, charles campbell is noting that would put the dow at the open at 10,007. so you could get it literally right at the open.
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most likely very quickly there after. let's count down to the opening bell and bring in brian. so let's just say it happens. then what? then what? >> yeah, you know, it's been -- we had a slow run into the week because of the columbus day holiday. we have a market that in this graphtational pull towards this round number, the big picture on this is we have a bunch of positive data on the economic and earnings front. i think that's, you know, reinforcing this bullish run that we've had. bigger picture though, we have an economic recovery that's under way. it's not going to be a smooth sale. it will be choppy from time to time. and we've seen nice gains. to see backings, i don't think it will be overexpected. >> what about what jamie diamond said in the earnings release for j.p. morgan. we're seeing consumer stability. we're not certain this trend will continue. now i know some of the charges they're taking or the loan loss reserves, if things turn up for the economy, that will go to the bottom line.
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certainly that is true. maybe he is just being cautious here. but maybe there's something to worry about. >> all right. think when you look at credit stabili stability, you have to look at credit spreads. they have all come in massively to where we were this point last year. so from that perspective, the availability of credit is something that is still in quechlt but looking at credit quality and krelt volatility that we've seen, that's come down. we think that is a positive on a net basis. overalthough, it's about the consumer and the retail sales numbers, though not in the positive sign, have shown some better than expected numbers. i that i is breathing life into hope. the bigger picture is story of recovery. we're in a u-shaped recovery. we're on the backside of that u. so we think that the economy is on the mend. but it's not going to be a steady eddie kind of run from here. >> and in terms of the other banks, we're going to get this big surge thanks to j.p. morgan. then later in the week names like citi. does this mean everybody is going to focus on the fact that they're all better than expected and ignore any of the comments on credit and consumers?
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>> yep. you know, i think everybody is dissecting the reports here at wells fargo. we're neutral rated relative to the financials. bigger picture though is what happens. we have a lot of discounting going on. because of that j.p. morgan number, you'll see sympathy bids around the street and may price in that good news as we get to earnings news. >> all right. thank you very much from wells fargo. and optimism ruling the morning. we have ten seconds to the bells. we'll see if we get the open pop right above the 10,000 level. >> yeah. once they get everything open, it should happen. >> yep. >> the bell is ringing now. here at the big board, fis. celebrating the completion of the merger with a company that provides banking and payment technology. a wide variety of institutions. and at the nasdaq, the american kennel club getting together, this is a first, aaron, with the
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cat association. >> cats and dogs are getting together? >> they're doing a love thing at the nasdaq. >> well, maybe that's a whole omen thing for the market. optimism can take over when cats and dogs finally make peace. let's get to our market reporters. everywhere you need to be. we're not fully open. we'll get that 10,000. scott, what's up? >> yeah, we're getting open. i'm right in the thick of the action. this is where j.p. morgan trades. sizable crowd here. the stock is getting open. it's opening to the upside, obviously, after the stronger than expected earnings. eps, 82 cents versus 52 cents. all of the financial stocks tots upside today. and that is fueling this pickup off the open in a big strong open that we've had. citi trades over here. it is open higher as well by about 13 cents or so. not a huge move to the upside for citi. nonetheless, the financials are getting a nice boost. abbott labs, they beat two cents
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ahead of estimates. perhaps more significantly, they raised their outlook. that stock higher as well. csx, three cents ahead of expectations. revenues were slightly below. the company saying the worst is over. host hotels, meantime, they own more than 100 properties, most operated by marriott. the eps beat, it was largely on cost cutting. they say the average room price is down from a year ago, also revpar that, is the significant metric in the hotel business. that stock has also opened. i'm going to walk over here and see where we are right now. i couldn't see the board from where we were. and right now the dow is 9959. so we're inching closer to 10,000. the last time the dow jones industrial average closed above 10,000 was more than a year ago. october 3rd of 2008. let's head up to bertha coombs at the nasdaq with a significant story. started after the bell yesterday. and that is with that intel and that strong beat. >> that's right. and we're watching, of course, the dow not yet at 10,000 but a
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new 2009 intraday high. and we're just about two points away from that here as far as the nasdaq if we were to close at this level today, though, it would be a new closing high for 2009. watch anything above 2146. intel, the big reason why. definitely powering this morning. intel beating on the bottom line. but the bottom line with intel is they beat on the top line. they came in with $9.4 well aheaded on revenues and boosted the revenue outlook. it's having a big halo effect. the chip equipment makers are higher despite the fact that they're trimming capital expendnde. we also had altera if we can bring up the board. better than expected numbers as well. and boosting its outlook. the pc makers and computer makers are also doing better this morning as a result of intel. and we're seeing a big spillover effect overall. microsoft is up. google is going to be reporting
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on thursday. and it is also up by 1% as well. so we're seeing that intel effect moving us higher. but we have yet to put out a new one-year high intraday level here at the open on the nasdaq. let's move on down to brian chapman. >> thank you. i want to start with gold again. we actually are in positive territory when the dollar came close to those lows. but we're negative now by 70 cents which is still interesting because the dollar is weaker. but traders tell me just wait. if it doesn't switch around, it will be very surprising to a lot of people down here. of course, maybe the weak dollar will win out. strong equities are still a factor. then i want to talk about oil. we touched $75.17. we're right around $75. a key resistance level for a lot of people. some people if it breaks to the up side, we don't know what will happen. this is defying a lot of fundamental elements. i also want to point out opec adding 200,000 barrels a day to
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the 2010 outlook. the rest of the complex, nat gas is the most volatile. it lost 29 cents yesterday. let's go to rick in chicago. >> we all know that data this morning, especially down 1.5% on headline retail sales, might have disappointed some. but it was better than expectations. and ex-autos, maybe more important post clunkers metrics. better than anticipated. up .5. so as we digest that and positive earnings, of course, we all see that everybody is exciting about a run for 10,000 on the dow. there is also a bit of run towards higher rates and unlike yesterday, it really seems to be met with the long end being the most pro active, meaning tens, 30s selling off a bit more aggressively. we're talking a handful of basis points. the big story today may be the fact that a ten-year note is moving closer to 3.5% than 3%. we want to keep an eye on other supply.
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>> thank you very much, rick santelli. breaking news. i'm not sure if this qualifies as breaking news. but anyway the dow -- >> almost breaking news. almost at 10,000. >> okay. well, even if it does get to 10,000, it's not breaking news. >> well -- >> anyway. >> it broke my heart. i started investing when it was at 10,000 ten years ago. >> we keep hitting intraday highs for the year. that's a surprise you to. right now the dow up is about 100. s & p up 13. nasdaq up 26. doing real well. okay. at the nyse with us this morning, michael farr, president of farr, miller & washington and cnbc contributor. proud owner of an original dow 10,000 hat. >> yes, sir. >> michael, i'll start with you.
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how far does this rally go? >> higher. okay. pick up another couple 100 points, sure. i do think 11,000? no. but you have been a moron if you've gotten in front of this momentum so far. 60% off the lows. i've never seen -- i agree with doug cast. i have never seen fear turn to greed so amazingly profoundly and quickly. >> profitable fear -- or profitable greed. >> if you missed out, you really missed it. >> how far can we go? >> let's take a longer term perspective. we were at $85 in '06 and '07 in terms of earnings. we're probably going to trough here around 60. if we think about getting back to $95 to $100 in 2011, at the levels that we're at, we could be up 40%. so we have upside from this level. we start looking at price to book. we start looking at dividend yields. we look at very low interest
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rates. we're just getting back to a point now that the heavy lifting starts. we just got to have companies executing on revenue. the profits look like they're coming through. intel and j.p. morgan. nice to see that happening. if we get dow 10,000 on j.p. morgan's earnings, this will be a nice water shed. >> do you need on a macro level income growth? real income growth? since you're not going to have the same credit you had over the past few years? do we need to have real income growth for the market to go 40%? >> we need balance sheets to improve and income growth. in order to drive consumption, it's going to be important to have those. but i think the seeds of this rebound are going to be in the export side. also in terms of business investment. we've got a big upgrade cycle ahead. windows 7 comes out. we think also housing has been on its back. we're building below -- we're in deficit in terms of housing. >> not building enough? >> we're not building enough. for household formation that should be 1.# million plus
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another 300,000 homes destroyed. we're only building about 600,000. so you're starting to see homes start to pick up. and that's going to be important. that's what drives employment. and without employment, it's going to be hard to really drive consumption. but there's some other things there with the emerging markets, with investment and with the inventory rebuild that i think can keep things going. >> you don't believe in the new normal, huh? >> i don't believe in the new normal. i think a lot of things are going to change as a result of the crisis. we're certainly seeing the leveraging, we're seeing a lot of businesses put cash on the balance sheet as opposed to relying on the commercial paper market. that is a very big change. but in terms of the new normal, it is a very depressing scenario. we don't have to go there. there's nothing that says we have to go to this new normal. >> david, a lot of this runup that we've seen so far has been multiple expansion. and in anticipation of earnings growth that may come -- that we certainly hope will come once the stimulus goes away and consumer demand ultimately returns. but that's the bet, right?
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and that's a big multiple bet. i'm making that bet. touch stone mutual funds is launching ten new funds this month. one is farr, miller and washington's running, a new mutual fund that we're just starting. we believe in the demand. we believe in the long-term valuations. but there still seems to be some in between. this -- we have not seen this before. something here is new. e is a lot that is new. no doubt. we're looking at taxes and regulation and a lot of other things of but in terms of what we see from earnings, bottom line earnings, companies are hyper competitive. strong earnings coming through. we're excited about that. i think we have upside nerngs. price to book is only two times versus three times. you get the last word, ten seconds. wrap it up. >> i think it's probably a bit ambitious to think we'll see 28% earnings growth for 2010. so i'd be cautious here. and, yet, i would buy on a pullback. i like valuations. >> all right. david gertz and michael farr,
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thank you very much, gentlemen. >> as all the debate continues on what is the new normal and do we need income growth from consumers to get stock prices to keep going up, less's bring in the frez apresident and ceo of . so now they're the largest provider of banking and payment technology. so what is your view, frank, on this status of the american consumer and in particular their ability to pay down debt? >> well, i think if you look at the american consumer ability to pay down debt, the first thing is consumer confidence, right? at the end of the day we have to build up consumer confidence. we need unemployment to be going down. we have to drop that unemployment rate. we have to get people back to work. once we gain that confidence back, i think it's just naturally going to follow that people are going to pay down the debt and have a stronger recovery. >> you are seeing any trends?
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i guess this depends on what your business model is, but in termsst size of the size of transactions or the frequency they're using a debit or credit card? >> yeah, the number of transactions has actually grown. but the size of the transactions to your earlier point are smaller. so the dollar amount is less than it was in the past. but the number of transactions continue to grow. >> well, isn't that because -- and a dunkin' donuts or a con seen yens store, someone will whip out their card instead of handing the clerk a $5 billion and moving on? >> i think it's twofold, yeah. i think people are using their card more making transactions lower dollar amount transactions by card as opposed to cash. then when they go by goods, ther they're getting more discounts. so it's a combination of both. >> how is the recession impacting your company, briefly?
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>> i'm sorry? >> how did the recession impact your company? >> as you look at our company, we service mostly banks and credit unions. our bank is a little more cautious and investment spending. so what they look for is they say, if i could get short term revenue gains, lower my cost in the short term, i'm going to invest in products. obviously i have to stay competitive. longer term, maybe i'll wait a little while before i make my decision. maybe i'll give it a little bit of time. it slowed it down somewhat. >> all right. well, sir, we thank you. i'm sorry, we're out of time. thank you for your time. and, of course, best of luck as the merger moves forward and you integrate and coordinate and all that stuff. stocks are up. but -- >> not enough. >> don't forget gold. we didn't hit 10,000. >> we did not. we still could, obviously. we'll keep a close on it. we're up 85. 9956. gold is down $8. we're still north of $1,000.
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welcome back to the floor of the new york stock exchange. the march towards 10,000 continues. the dow jones industrial average sitting 50 points away from getting back to the 10,000 level. and that has a number of new stocks reaching new 52-week highs. let's start with j.p. morgan. knocked the cover off the ball with the earnings. since the march lows alone, the stock is up about 191%. financials have largely led the way here in that recovery from the march lows. you're taking a look here at new 52 week highs. there are 70 or new highs in the s&p 500 today. j.p. morgan, emc. so you're getting them in the technology space as well. a really strong intel number. even from the retail space with nordstrom hitting a new high. one of 70 stocks, at least, on
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the s&p 500. new highs to day. >> thank you very much, scott wapner. interesting our alert desk noting lots of retailers, tiffanies, abercrombie and fitch and all of those names hitting one-year highs. nordstrom. amazing to see the retailers on that list. oats, as we go to our commodities corner, breakfast edition. mark is eating tuna fish. i got some on my finger. mark! you got it on the back -- you are waiving it in my face. orange juice. and coffee. so basically if you look at these trades, can you have a little oats and a little coffee and orange juice and all that makes sense. and then mark has a whole lot of tuna fish. thank god there's no contract for that one. >> you got tuna on your fingers? >> yes. >> hold them up, let me nibble them. >> ugh! >> okay. gold hitting record territory in the last few weeks as you well know. focus today's five-star series. the first eagle gold fund up is
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41% this year. the portfolio manager, good morning, rachael. >> thank you. >> now you are -- you call yourself conservative within the realm of gold funds. why? >> well, we own gold with insurance at first eagle. it's a tenant of our investment flof philosophy. while people are talking about inflation, that is just one of the things that we worry about. we've always been concerned at first eagle about down side. we want to protect our unvestors over the long haul. gold is the best hedge over any of risks unforeseen and difficult it hedge against. >> and you own bullion. did you bring any with you? >> too heavy. >> how does that work? it doesn't earn anything while it's sitting in your vault. >> the safest investment we have is the bullion in the vault.
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it is safe of mining risk. it's already out of the ground. it's our asset. it's nobody's liability. that being said, gold bullion is not always the cheapest way to purchase the insurance policy. so we tend to look at the gold miners. we generally only invest in producing gold companies which also different shats us from a lot of the gold funds. you know, they'll invest in the exploration stories. we don't that so much. but we look at the stock price of gold. we analyze that versus the gold in the ground. and then we then compare that. and if the cost of extracting that. if that's cheaper then the bouillon, then we'll invest in the stock. if the stocks are cheaper, then we'll invest in the bouillon. >> one headline has been coming out from several of the big gold miners. they're saying -- we're going to stop hedging. they think prices are going up. they don't need to protect themselves from a drop. now they could be wrong. but what do you think? i mean you got gold already at record levels. they're saying up is a
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direction. >> i think there are two things. one, we -- because we own gold as insurance, we don't want to own those miners that hedge. within the gold funds, if you think of the largest gold company in the world, we generally only held around 2.5% of our funds in barrett. and that largely to the fact that they beth a great deal of their production. we want access to those ounces in the ground. we view that as the call option for our insurance policy. >> so you want the unhedged? >> exactly. we denlt want to take the macroview of the management team. so we applaud the efforts of the fact that companies have decided to unhedge -- unwind the hedge books. even about the price of gold, we may be reaching record highs. but if you look at the period from 2002 to 2007, gold moves up with every other asset. loose monetary policy, all assets went up. stocks, bonds, gold, all commodities. 2008 is when the insurance policy really kicked in. and while gold was only up modestly, if you compare that
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with equities, 4% up versus 33% down felt pretty good. >> yeah. rachael, thank you very much for your time. appreciate it. >> thank you. >> first eagle gold fund portfolio manager. what do we got coming up next? >> all right. we're going to talk bin tell and whether they set the tech tone for the rest of the week. big blue, amd and the stock which shall not be named are still to go. the analysts from fbr markets handicapping the rest for us. and here's a look at your s&p 500 movers. protecting your heart includes watching your cholesterol. now there's new heart health advantage from bayer. its non-aspirin formula contains phytosterols, which may reduce the risk of heart disease...
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all right. intel at a 52-week high along with a whole lot of names today. we're off just by the session, north of 100. up 94. we have not yet touched the 10,000 level. intel up, really started off the optimism. then you had snoods. and then you had jamie diamond's from j.p. morgan. sparking optimism around the globe. intel's cfo stacy smith spoke with jim goldman about those intel numbers. here's what she said. okay -- i don't even have what she said. apologize. let's bring in our analyst. he had a chance to go through the numbers.
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craig berger joins us. you just raised the price target on intel to $27 from $23. unmitigated good news in the results? >> absolutely. the results are very strong, erin. and the earnings power is more substantial than people expected, particularly because of the gross margin results and guidance for q-4. i think the whisper numbers were high on intel. but everybody was concerned that the whisper numbers were too high. i don't think there is a lot of buying ahead of the call. we did tell people to -- that there could be near term appreciation in intel. i think the fourth quarter guidance particularly on the gross margin front was much better than even the whisper numbers. so things are really good at intel right now. and consumer demand in particular seems to be the near term driver. >> there is one caveat i'm reading in your notes. en that is have we pulled some fourth quarter pc production into the third quarterer? >> right. so that's the main concern is the state of fourth quarter sell
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through. and whether component shortages and the launch of windows 7 coming up here in a couple weeks has motivated some pc production. so i think intel would be up more than it is right now today on the monster beat if these sell through concerns weren't so precious. >> is windows 7 going to be a bigger boost to pc sales than vista was? >> vista was pretty much a snoozer. so let's hope so on the whippin 7 front. i don't think people go out and buy new pcs because of an straighting p operating system upgrade. the machines are getting old, especially in the u.s. where capital budgets have been constrained. >> greg, we got to go. >> thank you very much. >> i'm betting that people will buy new machines. >> i got to correct. >> we have to go. >> stacies with a man. we'll be back. tdd#: 1-800-345-2550
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bigger drop of down to 1.1%. but all in all, you can look at this number in so many ways. if inventories are lower for august, that i will am pact that quarter's gdp in a negative way. it has the potential down the road to enhance, of course, gdp as we make more wages. there's a lot of buying potential down the road. that's hard to handicap. retail sales wasn't good. but ex-autos it was. and what's the difference in this number versus the marketplace? not much. just a little below $3.40 on the ten year. i'll let erin burnett take it from here. >> thank you very much, rick santelli. watching the markets, they took that right in stride. the drop was a bit more than expected on inventories. let's bring in scott wapner here. >> all right. >> so, you know, it feels a little sad here because we were going to hit and we didn't. >> it's still early. >> 37 points away. >> yep. >> let's talk for a second, i think most people think we're
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going to get to 10,000. whether we close above it is the key thing. a lot of people i'm talking to down here don't necessarily think that we'll close above it today. maybe it's after goldman sachs's report is the next catalyst. >> do they think that -- i know it's psychological, right? that's why we're talking about it. but it also has a little bit more significance? >> don't diminish the fact that it's psychological f you're talking about the fact that there is $3.5 trillion on the sideline zshgs the psychological hit of 10,000 bring that money? so just because it's psychological doesn't mean that it's a negative for the market. that could potentially be a positive. so let's talk for a second though, erin, how we got here in the first place. the dow versus the dollar, the dollar index since the march low. you're going to see what a divergence there, right? the dollar has continued to weaken and risk has come back into the market, you're goog ino see the dollar go like this and the dow go like this. that is a significant story in and of itself as we've been talking about on a daily basis.
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the other is the fact that what the financials have done since the march lows. jp morgan aloerngs the big story of the morning. the better than expected earnings is up like 190% since the march lows. the financials -- >> incredible. >> and the financials are the best perform willing sector since the march lows. we have ridden the wave of the weak dollar and on the back of the financials. >> amazing. even with all that, we are still shy of $5. that goes to show you how much further there would be to go if the optimism turns out to be justified. all right. scott, thank you. scott watching very closely. and let's bring in bertha coombs over at the nasdaq. i know you had an intraday high as well. but you also have the intel story. >> yeah. the intel story is really what is moving us there. at this point if we were to close right now, the nasdaq would be closing at a new high for the year. intel is one of the drives. we've seen the other ones moving day after day. now we're at a new high. it is higher than $21 a.
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it's come back quite a bit from that. the thing that has gotten everyone very excited is the fact that intel says the consumer is strong. everybody's been worried about the fact that enterprise corporations have been slow to upgrade the pcs. they figure consumers are hard pressed. consumers are buying the gadgets that they want. and they're actually buying the higher end pcs. intel's margins were higher as well on the higher end chips. so we have a lot of chips today as well as new highs including some of the communications players. altera also boost the outlook as well. they're showing better sales. pmc sierra. april sl higher. back to you. >> all right. thank you so much, bertha. as we talk about highlights, high being the operative term there of the day, oil is on that list. i'm just looking up here. we're up almost $1. brian, what is the reason?
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>> well, it's a situation where there's optimism about the future here. and opec raised again their 2010 demand levels. but what i want to really do is take up a chart and compare oil. we're doing all the year to date highs. take a look at oil versus the s&p 500. it's clear oil has been enfuego. we're in a situation where we're autopsy $1. look at the intraday chart. we touched $75.40. everybody is telling me that $75 mark is key in terms of resistance. if it closes above it, we don't know where it's going. the fellows over at mf global, mike fitzpatrick say we could finish the year between $80 and $100. i also want to talk about gold. obviously in full focus. we have weaker dollar and gold down about $4. of course, a lot of people here traders on the floor don't necessarily buy into it, no pun intended. they don't believe it's going to stay that way. but that's how it is at the moment. maybe it's risk appetite.
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who knows? the commodities are on the up side. gold not par taking at the moment. back to you. >> all right. thank you very much. retail sales in september. stripping out the volatile component. increasing for a second straight month. is it a sign that that's the consumer has been greatly exaggerated? and if so, where and what will people be buying? andy wolf is a retail analyst with bbnt capital markets. he covers drugs, drug stores and grossers. we have the ceo of zeda marketing, a digital marketing agency. they monitor over 100 million blogs a day for consumer feedback on products and brands based on volume and tone. if i had to do that, i would shoot myself. andy wolf, let's start with you. what do you think of the consumer? coming back to life? >> yeah. actual lishgs it w actually, it was a really good month. across the board, except the
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home building showed a little improvement. now, you know, before we completely jump for joy, the numbers are still negative. if they continue on trend, it will flatten out and turn positive next year. >> can we get back to where we were before the meltdown? you know, it's my impression -- and a lot of smart people are telling me credit is not going to be as widely available. there's going to be a new normal. over time we will but not real well. we talked about how credit card purchasers were down at the drug stores. that's a $13 average purchase. that is still the trend. i've been calling around to my company. so looking anecdotally up rather than having a model, it still looks like people are reluctant to whip out the credit card right now. i buy into that. i don't know if it's structural or jobs related.
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but it's going to take a while. >> what are you learning by monitoring all the blogs? >> we have a piece of technology doing it for us. so there is not a lot of human beings going through all that. what is happening is consumers are much more value conscious. when you scrape content from the blog is the words easy and deals and value. so the big category this year as we look at september and into the fourth quarter, fashion apparel definitely a lot of tone. consumer electronics tfg interestingly enough is very, very strong wachlt is not strong is jewelry and luxury types of items. but consumers are out there and they're definitely bullish. they want to spend money. they want the best deal they can get today. >> what -- what consumer can you parse it even further? what consumer electronics goods are people thinking of buying?
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because i mean all of the latest gadgets out there, the ipod, all different new gadgets that are coming out. people are spending money there. but, again, they're looking for superior value. if you think about the retailers that are the most often mentioned in the blogosphere, it's the amazons of the world. it's the kmarts, the kohl's and what will mart. walmart is giving away hundreds of toys at $10 apiece. so the real buzz word that we're doing is value, value, value. and the change in the retailers focusing on value are the ones that are going to have a great fourth quarter, we believe. >> all right. gentlemen, thank you very much. andy wolf, thank you. 70 new 52-week highs on the s&p 500 this morning, erin. >> yep. >> 70 of them. up next, more on this market rally. plus, senate finance committee myrrh sent kent conrad on why he voted for health care reform and
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what must happen next. and then will 2009 be a record year for pay on wall street? when you look at numbers like j.p. morgan, it is a fair question to ask. and later, you heard it from the administration here yesterday. the dollar losing its strength may not be the end of the world. ( inspiring music playing ) someday, cars will be engineered using nanotechnology to convert plants into components.
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who are matthew tannen and ralph chuapi? i don't blame you for not knowing or forgettingment i forgot, too. they were two former bear stearns hedge fund managers. >> two of the first. misrepresenting funds to investors. >> frankly, i had completely
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lost track of them. they were kind of not a big part of this whole deal. anyway, they're arriving at federal court in brooklyn just a few minutes ago. >> let's take a look at the major health insurers. and a little bit of a rough day yesterday as the baucus bill did pass. it did include a tax on high value insurance plans. among other thins. they're all up a little bit today. obviously that legislation is historic. it to change significantly. it lacks public option. who knows if the final bill will include one. we still have to have that bill merge with the health care billion and then the house and senate need to go into conference. then a final bill gets passed. a lot more can happen. olympia snowe was the key. she went out on a limb and supported the legislation but made it achingly clear, mark, that it was just that bill. if things change, they may or may not vote for it. so will the final bill get the 60 votes it needs to pass. kent conrad, member of the senate finance committee voted yes for the baucus bill. good to you have with us, senator conrad.
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>> good to be with us. >> so the baucus bill lacked that public option. there were a couple other sporn differences. public options, is it still going to be the fault line? >> you know, it's hard to say. clearly it is one of the major issues left to be resolved. but remember the difference between this plan and many of the other plans and even more significant difference is that it's paid for and it bends the cost curve in the right way according to the congressional budget office. so this is the first plan that we have seen that is fully paid for. in fact, reduces the deficit by $81 billion over the first ten years. and over the second ten years, will reduce the deficit by $650 billion to $1.3 trillion according to cbo. $1.3 trillion? >> over the second ten years. cbo said this legislation would
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reduce the deficit in the second ten years by one quarter to 1% of gdp. that translates into $650 billion to $1.3 trillion. >> okay. senator -- >> that's a big change. >> i mean no disrespect, but i really don't think the cbo knows what's going to happen next year much less 20 years from now. >> fair enough. >> you know -- >> but, look, we have one score keeper, objective score keeper that is nonpartisan that we have to look to. and that's why they've been very ca careful in what they've said. they said one quarter to one half of 1% of gdp. >> right. >> and they have acknowledged freely the difficulty of forecasting that far in the future. but, look, it's an important consideration. if they said on the other hand that this would bend the cost curve the wrong way, which they have said about other proposals, that would be a very serious blow. >> so, first of all, do you think the final version, that is
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passed, is going to include a public option? >> i will say this -- a final bill that has public option tied to medicare levels of reimbursement certainly cannot pass. and the reason is many of us, like me, represent low reimbursement states. in fact, my state has the second lowest level of medicare reimbursement in the country. and tying public option to medicare levels of reimbursement, good for california, be good for new york, be good for florida. it will be very bad for states like mine. and i can tell you there's no way that would pass. >> what about these -- the tax increases or the extra taxes being levied on varies members of the health care community that is a part of this legislation? do you think that's set as a way of funding? >> i think many of those levies were actually negotiated with the companies themselves and the industries themselves in recognition that they're going
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to get substantially more business when 30 million people have coverage that now don't. so many of those levies will remain. but some of them, i think, are subject to reconsideration. for example, medical devices, i think there's a general consensus that that levy is too high. the industry had been negotiating around a level about half of what was imposed. so i think there are places where we'll see adjustments. >> and is there any requirement in here or something that will happen where these companies will have to say we're going to do this and that means we're not going to be just passing this tax increase along to consumers in the form of higher prices? >> probably very hard to get that kind of assurance. although, many of the -- much of the analysis that's been done shows that in many of these industries it will be hard to pass through some of these levi levies. as you know, another part of the
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financing mechanisms is savings from medicare providers not from medicare beneficiaries. but for medicare providers. many of those have also been negotiated. although some of those, i think, are -- need adjustment as well. >> thank you very much. we appreciate it senator conrad. member of the senate finance committee. let's talk about the health care reform package. all right. wall street on track to award record pay. major u.s. banks and -- where am i? anyone want to tell me? thank you. major u.s. banks and securities firms are reportedly on pace to pay their employees about $140 billion this year. according to "wall street journal," workers at 23 top banks hedge funds and asset managers can expect to even earn more than they did in 2007. that year those companies paid $130 billion in compensation and
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benefits. and there were more people working in that industry back then. they fell to 1$117 billion last year, poor babies. the revenues have been exploding. they are projected to hit $437 billion this year. do the math. that means these firms in the aggregate are paying out about a third. so if you own stock in these companies, a third of your money is being paid out in bonuses. this news comes at a time when -- now we're over here, small businesses are still having a hard time getting access to credit. unemployment is approaching 10%. and report in today's "new york times" discusses the increasing number of americans taking pay cuts to hold on to their jobs. anyway, still to come, the faber report.
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up next. on his radar, moves by cvs and viacom. it's payback time for national amusement. and later, going undercover to protect your money.
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we're offer the highs. nonetheless, 9953. and the question, is although it may seem a mere headline, psychologically, will we hit
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that 10,000 level today or not? j.p. morgan obviously the real spark towards the surge. let's get to david faber for the latest installment of the "faber report." >> thanks, erin. want to talk this morning about cvs and viacom and the controlling shareholder of those two entities, sumner redstone. he controls them through the national amusement holding company. you may recall there's been a lot of consternation about national amusements and the significant debt load it had. need to repay some debt or restructure it because of the value or the seeking value over the last year of the holdings it has in cvs and viacom. it is in that holding company that redstone controls the votes of both those companies. and has, you know, reasonably -- well, ever shrinking size of the economics. let's get to the news this morning. national amusement has a paymen of october. it was in the process of selling the movie theaters.
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this is where the company all started. redstone's father oenld the circuit in the u.s. also a bunch of farm theaters. they were taking business leaders from the foreign theaters. maybe they were getting low balled but what happened instead is that despite having said previously he would not sell any more stock in cbs or viacom that, is what is going to happen. both those stocks, of course, have been up sharply. so he's going to sell or national amusements will sell roughly or over $900 million in both cbs and viacom stock. the stock sales and then the continued potential divestiture of some foreign movie theaters by national amusements should allow it to eliminate most of the total debt it has of $1.46 billion. the stock sales are going to take place tomorrow. they will be priced after the close tonight. citi and j.p. morgan doing that deal. they're going to sell 25.3 million shares of cbs.
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conceivably gross proceeds of $3 4 45 million. viacom, $600 million will be sold by national amusement. it is not shares, it's existing shares. nonetheless, it is pressuring both the stocks just a bit. you can see cbs there and viacom at this point. both of them up sharply, though, of course, over the last six months. and that is why redstone may have said, hey, why am i trying to get bargain basement prices for the movie theaters when the stocks are tripled and doubled over the last few months? i can just sell some of them. but it will take economics in both of them down rather substantially when you take a look at the numbers. right now, national amusement owns 10.6% of viacom. that will get reduced to 7%. national amusement of cbs, 5.10%. that will be reduced to 6%. and so national amusements will hold 6% of cbs. 7% of viacom. and the movie theater chain and
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that's essentially what that company is worth. of course, mr. redstone will continue to own through national amusement a 75% voting stake in both of those companies. so he will continue to have complete and total control of viacom and cbs. both of which i'm told are not particularly happy about the prospect of him selling the shares. there is very little they can do about it. you saw ultimately the pressure on either of those stocks is not that significant. we'll tell you how they price up when we get that news, perhaps later today or tomorrow. >> thank you very much, mr. faber. we'll be back. and just ahead, we're going to focus in on one of the biggest questions out there which is the weak dollar what will keep america great or it is a move that could cause real problems for our country? we're going to sort through whether the u.s. dollar needs to be the reserve currency for the planet or not as we head to break, a couple more of those 52-week highs. all right, when you look at the future
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welcome back. at this hour i'm looking up at the dow, siptit is up 73. the biggest gainers, intel, dupont and j.p. morgan. the reason for the surge in the
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first place. in the s&p 500, you have harley-davidson, siena and auto nation. consumer related names dominating there. and doug cliggott is worried about profits. he is going to credit suisse as u.s. equity strategist, mark. >> let's take a look at the market and its internals. now the dow is up 71 points. we're dropping back. there was a really nice move towards 10,000. >> i can't believe we didn't cross it right -- >> i know. but you know, the day is young. here we are on the big board. you know, you'll have to pardon me. we don't have our normal monitor. looks like about 3 to 1 positive on the big board. nasdaq, can't make out the numbers. let's talk about 2 to 1. and up volume and down volume. on the big board, 4 to 1 positive. very strong day.
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even if we didn't get to 10,000, the dollar turning its -- tumbling to the lowest level in more than a year against the euro. this as investors continue to flock to the safety of gold which hit another new high this morning. is the dollar having a kafs the hiccups or is this a long term down trend/free fall from the dollar will survive camp, marco roark. and from the dollar suitable for wall paper in your bathroom camp, author of the new book "the dollar meltdown." mike, i think we'll get the good news first. >> well, the funny thing is i'm not so far off from charles in that i think the dollar is in a long-term decline. i think right now it's very much overblown because if you look at the composure of the global economy, there's not many viable
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a alternatives to the dollar right now. europe is not in a better position than we are. japan is not in a better position than we are. the uk is easing. and then going strong larger economies, china and the peg to the dollar, they don't have free capital flows. so in the short term, the dollar's position is a lot better off. and if you look at the earnings like we had now, the position here in the u.s. is probably a lot better off than a lot of people expect. >> charles? are we going to be able to afford to go out of the country any more? >> well, mark, necessity is the mother of invention. and he's right. there aren't a lot of good alternatives. but they will certainly be developed. people will not continue to hold. a unit accounting that is continually shrinking and is not dependable, we saw the terrible stagflation, the high interest rates and so on of the 70s as a resultst breakdown of the gold exchange standard. here before our very eyes. the gold prices signalling the collapse of the dollar exchange
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standard. it's going on right now. we're in for a very tough period ahead. >> so it gets down to the question, mike. first of all, let's point out something that if the dollar is stronger now than it was two years ago? there's a lot of fear that maybe contextalleviate? >> that's the thing find amazing. normally i'm a long term dollar bearment i sit there and sat first seven months of last year, the dollar traded at levels below the dollar index why we are now. all we did when we this huge flight to quality during the crisis last year. and that flight to quality has unwound. and basically people come back to the markets. so it's not like we're at new lows on dollars collapsing. i agree with charles's point. long-term, that there's going to be other options out there. and we as a nation, i think, have to acknowledge. that and react to it. >> charles, how much is -- i'm sorry, go ahead. >> how much is -- how quickly does this happen in your view? the plunge in the dollar? >> well, actually, these things happen a lot faster. i was reading a review the german inflation in the 1920s.
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a fellow said this happened like a flash, like a lightning flash in the wink of an eye. i'm not trying to predict anything like that. but it could get a lot worse and it could happen a lot faster than anybody -- anybody expects. >> ordinarily, charles, i do not -- i believe in markets. i do not believe governments can set the value of the currency. the market will set the value. however, in this case, you have some -- so much of the world has a vested interest in the dollar. it seems to me there will be a coordinated effort. the asian countries which hold trillions of dollars in reserves. i just -- i find it hard to believe they're going to let it happen. >> it's that old cliche about when your bank has a problem. i mean they certainly have a
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problem because of the dollar position. andnotwithstanding, they're not going to announce the sudden heading for the exit and tip everybody else in the world off. >> but where would they -- a, i don't believe they will let it happen. and, b, where else can they go? you can't take a trillion dollars and turn it into euros, there aren't enough euros in existence. >> it can't happen overnight. you already see this referendum on the quality and quantityst dollar taking place. i mean you see china now, you know, in a surreptitious manner rolling out of government sponsored enterprises and rolling into more portfolio into treasuries. the whole story that kicked off a lot of this market move, the robert story and the independent is about a basket of currencies. my book was credited on the way to the book sellers identifying and describing the development of that same sort of thing with other currencies and eventually with the component of gold. >> charles, got to cut you off. want to give mike the last word.
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we're out of time. keep it brief, please. >> no, it's just there are few alternatives in the developed world. granted, other economy that's are growing are a lot smaller so they can't handle the capital flow. you need, you know, a fine tuned infrastructure, rule of law. and then a strong military to be in an important currency in this world as a reserve. and the fact is we still have all those things. no one else meets up with the united states on all those mash marks. >> okay. i have to leave it there. there is a lot more to talk about on this subject weeflt do it again. charles, new book, "the dollar meltdown," and mike o'rourke. coming up, just as napster shook up the music world, now liquid net is doing the same for stocks, allowing large blocks of shares to be traded ed anonymou. the ceo is next. >> that sounds good until something horrible happens. but we'll get details.
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something that we talk about this week is a real positive sign for the market is continued pace for initial public offerings. yesterday, a couple of the recent offerings were not doing particularly well. interesting to take a look today in light of, of course, the stock market's advance. why mention this? well, as we reported earlier this week and in week's past, there is a lot of other ipos
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waiting to get filed and sent out into the public world by a lot of private equity firms. and so i direct your attention to rail america, for example. shares of which are up today. but still down significantly from the $15 ipo price of just a few days ago. fortress, the private equity firm was the seller here of half of that offering, about $11.5 million of the 22 million shares that were sold. but an up day, if you will for that company despite, of course, having broken a syndicate bid significantly down substantially from that $15 a share price. also, a game company called shonda games. also down from its $12.50 offering a few days ago. take a look at game. shares of which right now are $10.22. up 3%. but, again, well, well below the $12.50 price. you have to start to see some of the things do better in the
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after market if one is going to expect future ipos are going to be well received. just a thought here, erin. want to keep an eye on both of those given their performance of yesterday. back to you. >> thank you very much, david faber. now with the flirtation with 10,000, you may have said where is bob pisani? he is with ceos to talk about all sorts of things from trading to dark pools to well, you name it. so let's bring bob in now with a special guest. bob? >> hello, erin. of course, we're at the securities global exchange ceo and investa conference. it's all the big ceos of the exchanges and some of the big electronic networks. seth marn here. he is the head of liquidnet. what ever happened to block trading? he's got it. if you're wondering what are hedge funds doing? what is the volume looking like? he knows. what a buildup, huh? let's start with that.
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let's talk about hedge funds. tell us what you're seeing right now generally. what investing or are hedge funds doing? bullish, bearish? where is the market? >> the sentiment, i have to say changed completely over the last three months. three months ago you visit these guys and it was dead on the desk. they didn't know whether the firm was going to be around or have a seat if he firm. today the sentiment is different. they know they have a job. the market snapped back big. you know, they've enjoyed some serious gains now. now we're talking about taking money off the table, litening up for the end of the year and just positioning the portfolios for coming into the new year. >> this is important insight. hedge funds tend to move several months ahead of the big institutional funds that are out there. so you're saying they're staying put or litening up right now? >> they're lightening up. but what we've seen in the institutional market is hedge funds get into rising markets and gut off the climbing markets
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three months. today, they're pretty much just staying where they are. >> and institutions, of course, he's talking about mutual funds and pension funds. so you're saying even those big organizations, they're also pretty much standing pat right now? >> yechlts. i think the hedge funds are up ahead of the institutions. >> let's talk about trading volumes herement one of the things that is interesting it is looks like asia is coming out of their recession before the united states and before europe. are we seeing any signs among traders and trading activity over there that that in fact is happening? >> we see the institutional sector and asia and europe doing much better than in the united states. meaning, there's a lot of flow going into asia and a lot of money going into asia and europe which is really rising them. that is truly a leading indicator of institutional sentiment. so our business is up tremendously in asia and europe. >> i want to -- this guy is an expert on high frequency trade. he's one of the great experts on this subject.
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let me ask you, how is high frequency trading changed the market? how is it -- it seems to me like it's not so much of an investor market as it is a trader market now. and high frequency trading is important fact behind that. >> it is. and people have to understand that, you know, you can't say that's all good or bad. it's a whole new sector of investor or trader. which is more accurate. last year trading accounted for 30% of the volume in the market. this year it's about 60%. and for the first time we're seeing that the amount of profit that's are being made by some of the high frequency traders which is massive so that next year it might even quintuple the amount of money being traded to day. retail and institutional and then the market makers to facilitate that. today, we see an shift from an investor market to what could become a traders market. >> we have to go. the sec is looking into this. do you see the probability very high they will be -- will make some kind of ruling on this?
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>> i think they ruled out the flash orders very quickly. i think that was bad. high frequency, there's good and bad. >> 60% of the volume high frequency trading. that's very important. erin, back to you. >> thank you very much, bob pisani. what do we got? what's making news? that doesn't sound like the music we use -- all right. i thought we were done. i thought that was the oh, trish song. >> not yet. first you have to say why this woman may be your biggest ally when it comes to pro teching your money. can't show her face. we'll explain why in two minutes. and then i have to say -- >> yes? >> but first -- >> oh, trish? >> yeah. i was going to sashgs it's going to be a duet. all right. so coming up at the top of the
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hour, we have a lot planned for you on "the call." it's all about j.p. morgan's unbelievable eshgs here. we're talking about this market as we approach 10,000 getting awfully close. talking about all the earnings numbers that are flooding these days. we're going to have all that coverage for you. plus, we're going to discuss the weak dollar. we'll discuss oil. just exactly what you need to be doing with your money right now. also in another cnbc exclusive, we're talking with the ceo of denny's. good ole denny's restaurant chain and get his take on the fast food industry and on the economy. we have lots ahead for you only on "the call" at the top of the hour. first, "squawk on the street" is back right after this break. tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one.
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2009 will go down as many beautiful things, but one will be the year of the major ponzi scheme as well as allen
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stanford. to help prevent future schemes, there's a new idea. a private security company which was a private solution. the president and founder is with us. this is on purpose. you cannot see her face because she is the one who goes in and does on-site investigations and for that reason, needs to protect her identity. it is an interesting image. chris, let's start with you. chris, what exactly are you doing that would prevent another bernie madoff? >> the history of fraud is always of an intelligent criminal who knows what the due diligence are and overcomes them. what we have here is behavioral analysis. it's providing an investor is
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due diligence effort. >> and elizabeth, what about your job? what do you do when you go in a workplace? >> basically, a credibility assessment. there are four areas i would focus on. one, facial actions. the second is micro expressions. thirdly, bodily language. lastly, i do a statement analysis on the client's written and verbal statements. it's a holistic approach that takes into account all these k facto factors. >> do you think you could have caught bernie madoff sooner? >> we'll discuss certain components of madoff that indicateteeries of emotions, but yes. looking at drier, stanford, all these folks, when you look at
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their statements when their making them, there are obvious signs of deception which couldn't be revealed in the public document which the doctor and other behavioral scientists and others couldn't have figured out. >> you think you would have figured it out? >> i think what i could have done is gone into areas where he was uncomfortable or being i vasive or acting different and that would be areas that should be probed further. >> have you seen an increase in business, chris, or not? >> no. we are extremely busy and since we launched this practice area quite recently, have gotten a lot of notice from those individuals.
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>> so, you do your thing and then you what? write a report for the client? >> no. in fact, i would give realtime feedback to our client. i would be present in the meeting, which is another reason why you're not showing my face. the subject of the meeting would not know that i was there to do a credibility assessment, so i would participate in the meeting as part of the management team and i would be an observer because the interviewer is focused on the next question, the follow-up question and the present answer. i'm looking at the nonverbals, the response to questions in response to different probes the investor might be looking at. then we'll take a break and i can provide the investor with areas that the person seemed uncomfortable, deceptive or m
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misleading. >> thank you very much. we appreciate your time. >> thanks so much for having us. >> must go in with another name, obviously, because -- >> obviously. >> i mean -- >> or i'd give your name. >> we're going to be right back with a final look of the markets. we're near the high of 96. if i had to sit on the bench due to diabetes...
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